RRSP deadline is March 3 - but don't rush into a mistake

The 2024 tax year RRSP deadline gives you one month to decide, but last-minute contributions often backfire.

You have until March 3 to make an RRSP contribution that counts for your 2024 tax return. That's one month. The rush is real, but the biggest RRSP mistakes happen in February and early March when people throw money at their account without checking if it makes sense.

Here's what matters more than the deadline: whether you should contribute at all.

Check your 2024 income first

The RRSP refund depends on what you earned last year, not what you'll earn this year. If 2024 was a lower-income year - maybe you were between jobs, took parental leave, or worked part-time - the tax refund from an RRSP contribution will be smaller than usual.

At $45,000 in Ontario, a $5,000 RRSP contribution gets you roughly $1,400 back. At $80,000, that same $5,000 gets you $2,500. The account is the same. The refund isn't.

If 2024 was low but you expect higher income in 2025 or 2026, you might want to skip this deadline and contribute next year when the refund is worth more.

Don't max out just because you can

Your 2024 RRSP limit is based on 2023 earned income - 18% of what you made, up to $31,560. But you don't have to use it all. You don't lose unused room. It carries forward forever.

The pressure to "max out" before March 3 leads to bad decisions. Borrowing to contribute. Emptying your emergency fund. Using money you'll need this spring for car repairs or vacation deposits.

An RRSP contribution you can't afford costs more than the tax refund it generates. The math doesn't work if you have to borrow the money back out at 20% credit card interest.

TFSA might be better anyway

Below roughly $55,000 in income, a TFSA usually beats an RRSP. The tax refund is smaller at lower incomes, and you'll likely be in a higher tax bracket when you retire than you are now.

Above $70,000, RRSP typically wins. Between $55,000 and $70,000, it depends on your province and your retirement expectations. TaxSplit.ca will show you the exact breakeven point for your situation.

If you're not sure, the TFSA doesn't have a deadline. You can contribute any time during the year without affecting your taxes.

What to do right now

Don't contribute anything until you know your 2024 income. If you haven't received all your T4s yet, wait. The CRA processes late RRSP contributions - you have until the end of the month after you receive a tax slip to make it count for the previous year.

If 2024 was a good income year and you're above $60,000, an RRSP contribution before March 3 makes sense. Contribute what you can afford to lose for at least 10 years. Not what maximizes your refund.

If 2024 income was low, or you're not sure, skip the deadline. Your RRSP room carries forward. February panic contributions are usually wrong.

Check your contribution room on your CRA My Account before you contribute anything. Over-contributing costs 1% per month on the excess. That's 12% annually on money you shouldn't have put in.

The deadline matters. But getting the decision right matters more.